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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (44917)	7/23/2003 10:34:29 PM
From: Lazarus_Long	Read Replies (1) \| Respond to of 57110

That means debtors are agreeing to pay back cheap dollars with dear (at least if they expect deflation to continue- -and after a while, they would). Why do that? You need strong incentives pay high rates- -like expecting a high rate of return, which is incompatible with deflation over the long run. Deflation implies a negative rate of return. With deflation, since creditors would have a hard time getting debtors to take money at all since the debtors are looking at a loss, it would seem that creditors would have to lower rates to attract any takers.